Citigroup

Sheila Bair, who served as chairman of the Federal Deposit Insurance Corp during the crisis and its aftermath, levelled fresh attacks at Mr Geithner, the Obama administration, fellow financial regulators and bankers such as Vikram Pandit, Citi’s chief executive, in a new book that has laid bare policy disagreements of the past few years…Ms Bair criticises Mr Pandit for a lack of commercial banking experience and says she tried to force him out. Ms Bair was “pushing hard” for Jerry Grundhofer, former chief executive of US Bancorp, to replace Mr Pandit. Citi’s board “could have done so much better than Pandit,”  Ms Bair wrote…Taxpayers were unnecessarily put at risk and Citi, despite its weakness at the time, was allowed to avert nationalisation, a forced reorganisation or meaningful restrictions on its activities, Ms Bair alleges. “The public justifiably wanted retribution. Citi should have been led to the pillory,” Ms Bair writes. [FT via Heidi Moore]

Here’s an interesting set of slides that Morgan Stanley CFO Ruth Porat presented at the Barclays conference today. For some reason this one struck me:

Morgan Stanley: basically a mutual fund! Half a mutual fund. Really barely at all an investment bank, which I guess is the way of the world for investment banks, but still sort of stark to see it there in black and white, er, navy and yellow. And Morgan Stanley will be shifting even more toward wealth/asset managing after today’s hotly negotiated purchase of Morgan Stanley Smith Barney.1 As Reuters puts it: Read more »

It’s long been a dream of his and now with the right headshots and a recommendation from new hire who’s got an in, it’s within reach. Read more »

About a month ago, retired Citi CEO Sandy Weill set his alarm an hour early, got out of bed when it was still dark, ate a piece of rye toast, told Joan he’d see her when he’d see her, took the elevator downstairs to wait for the car that drove him out to Englewood Cliffs, and went on CNBC to proffer a small suggestion to Wall Street: break up the big banks. Perhaps you heard about it? Not many people were receptive to the notion of Weill giving them advice on the matter, which may or may not have had something to do with the fact that in his day, Weill couldn’t get enough of big banks and was the man responsible for cobbling together the behemoth known as Citigroup, an institution so huge it can barely support its own weight. The response by most, in fact, was “Shut it, you old bag.” But what about Vikram Pandit, the lucky guy who inherited the place? What did he think of Weill’s tip? After giving it some good thought– really and truly considering it– for a few weeks, he’s decided to take a pass:

Citigroup’s chief executive has knocked back the idea of big banks being split up after calls from people such as his predecessor Sandy Weill.

But not for the reasons you might think! Pandit actually agrees with Sando because if you think about it, Citi’s already been broken up and is basically the bank it was before the merger that resulted in the need for firefighters to use a giant pulley system to lift it out of bed every morning and help it get around. Read more »

There’s been sort of an impromptu referendum on whether the big US universal banks should be smashed into itty-bitty pieces, and how itty-bitty, and which ones should be smashed first, and for some reason the leading contenders seem to be Citi and Morgan Stanley. Those two seem uninterested in that free advice, though, since they’re now haggling over the price of Morgan Stanley Smith Barney, the joint venture that is slowly migrating from Citi’s bloated clutches into Morgan Stanley’s also apparently bloated clutches. Whee.

Morgan Stanley owns 51% of this wealth management venture, while Citi owns 49%, and MS is looking to exercise an option to buy 14% more at a contentiously negotiated price. Citi carries MSSB on its books at a $22bn valuation and wants Morgan Stanley to pay a bit more than that to buy another chunk of it, while Morgan Stanley carries it at something like a $14bn valuation and wants to pay $9bn for it.* I submit to you that that bid/ask spread is not well calculated to make you feel good about (1) the intellectual rigor and independence of Citi’s and/or Morgan Stanley’s investment banking valuation work or (2) the balance sheet transparency of major banks. Thing (1) is I guess why the parties hired Perella Weinberg to be their neutral appraiser.** Thing (2) sparked Citi to put out an 8-K last week saying “oh btw we might have a huge hit to earnings when we mark down our ‘reasonable and supportable’ $22bn valuation to whatever Perella Weinberg finds,” which would not be great for earnings or Basel I capital or general confidence in Citi.***

That said I liked this approach to valuation: Read more »

  • 25 Jul 2012 at 6:38 PM

Sandy Weill Isn’t Fooling Charlie Gasparino

“Even so, it’s hard to take Weill seriously. First this is a man with an ego the size of the bank he created. People who know him say he needs media attention like an alcoholic needs a stiff drink, and he’s gotten precious little of it since retiring from the banking business six years ago.” [HuffPo, earlier]

  • 25 Jul 2012 at 1:52 PM

OH NO YOU DI’INT!


[via PIMCO, earlier]